Choosing the Right Lender

 
The choice is yours! If you plan to use student loans to help finance your college education, make sure you know your rights as a borrower when working with your school's financial aid office.
·         You have the right to choose your lender and are not required to use a school's "preferred lender list." You can also request from your school's financial aid office the reasons the lenders on a preferred list were selected.
·         Be informed and know which providers have the best interest rates, borrower benefits during repayment, and customer service. The MDHE's online lender list can help you.
o    Some lenders and/or their servicers subsidize (pay on your behalf) the up-front fees such as the Origination Fee (OFee). For a 2008-09 freshman-level subsidized Stafford Loan, an OFee subsidy amounts to about $35 in savings.
o    Many lenders offer a lower interest rate to borrowers who have payments automatically withdrawn from their bank account or who make a certain number of on-time payments.
o    Investigate whether a lender offers discounts or forgiveness plans.
o    Carefully consider your options and select your lender wisely. Additionally, if you need assistance calculating the actual long-term differences in lenders' various fee discounts and other benefits, there are calculators available to assist, such as the Loan Discount Analyzer on www.finaid.org.
·         To make your repayment process as smooth as possible, borrow from lenders using the same servicer and within the same loan program every year you need a student loan. If you borrow from multiple sevicers/lenders or programs, you will have to make multiple student loan payments each month. If you transfer schools, request from your new school's financial aid office that any new loans be made with a lender using your prior servicer.
Having trouble finding a lender? Check out Missouri's Lender of Last Resort program. 

QUICK TIP: Schools are required to work with ALL eligible lenders.
If your school won't certify a loan not on its preferred lender list, contact the Education Department's Federal Student Aid Ombudsman toll-free at 877-557-2575.